“With
all that programming under its control, Comcast will have every incentive to
take its shows off of the Internet and force consumers to buy a cable
subscription to get online access to that programming.”

So
said Public Knowledge’s Gigi Sohn, railing against the recently announced deal
to merge cable giant Comcast with GE’s NBC/Universal.The parties are already expecting a long regulatory battle,
with either the Department of Justice or the Federal Trade Commission taking
the lead, backed by the Federal Communications Commission. In preparation, groups including
Consumers Union and Free Press are polishing their crystal balls and predicting
doom.

Before
putting much faith in the Cassandras of consumer groups, regulators would do
well to review the sorry track record these organizations have in earlier
predictions that media mergers would create dangerous monopolies.

Indeed,
even as Comcast announced its deal with GE, Time-Warner was busy unraveling its
ill-fated 2000 merger with AOL.Advocacy groups at the time warned of reduced programming choices and
homogenized Internet content, of consumer “servitude” and the specter of
corporate “ministries of propaganda.”Instead, poor management of the combined properties cost the company
almost 80 percent of its value. Similar
warnings accompanied the marriages of News Corp. and DirecTV, Sirius and XM
satellite radio, and ABC and Disney.All wrong.

Merger
paranoia is nothing new, especially when rapidly evolving technologies for
transportation are involved.Today
it’s the transportation of bits, but similarly apocalyptic tones were heard a
hundred years ago over consolidation of the railroads.

Consider
Brooks Adams, great-grandson of John Adams and a principal adviser to Theodore
Roosevelt. Adams’s nemesis was the
Great Northern Railway and its notorious leader James J. Hill.In 1907, Adams demanded that the
Interstate Commerce Commission dismantle Hill’s empire.

New
technologies, Adams argued, called for inventive lawmaking.“There is no ancient and abstract principle
of right and wrong,” he wrote, “which can safely be deduced as a guide to
regulate the relations of railways and monopolies among our people, because
railways and monopolies are products of forces unknown in former times.The character of competition has
changed, and the law must change to meet it, or collapse.”

The
trust-busters won the battle but lost the war.Despite, or perhaps because of extensive federal
intervention, railways wildly over-expanded and competed to ruinous prices in
much of the country.In their
subjugated state, railroads proved unresponsive to even newer forms of
competition, including water and, later, trucking and air.Micromanagement of the U.S. railroad
industry did nothing to protect consumer choice or open access.The ICC, its job done, was dissolved in
1995, just as the Internet emerged as our next great infrastructure.

Adams
was wrong, and so are those now calling on regulators to hold back the tide of
entertainment industry reorganization.As new communications technologies increase bandwidth, all entertainment
content has been making the shift from broadcast to Internet — at first
illegally by consumers on Napster and Pirate Bay and today through services
offered by the producers themselves.

The
entire supply chain, from content creation to distribution to consumption, is
in transition.But we don’t need
the law of antitrust to save us.For media companies, as with the railroads, the real check on
monopolistic behavior isn’t regulation.It’s innovation.

Indeed,
a recent New York Times article noted that a clever combination of free
or low-cost offerings including Hulu, Boxee, iTunes, YouTube and Joost
eliminated the need for a cable TV subscription altogether.

Where
do Public Knowledge and other consumer advocates get the hubris to insist
Comcast has “every incentive” to destroy such innovations, including those for
which it is or will become part-owners? (NBC Universal has a 33 percent stake in
Hulu.)It’s true that Internet
content, still in its early days, isn’t generating enough advertising revenue
to cover its costs, but that’s hardly proof that media consolidation has the
sole aim of turning the clock back to a simpler time — say, 2000.

Digital
technology has put the entertainment industry under extreme pressure, pressure
that inevitably leads to new combinations of assets.Nobody knows what successful business models will emerge to
support loud-and-clear consumer demands for more content, more choices and
more flexibility in how and where they view programming. Industry leaders admit as much, even to
shareholders.

Perhaps
Comcast will find the magic bullet that kills online innovations and subdues
consumers who keep inventing ahead of what the providers are comfortable
offering.

Perhaps — but
not if a hundred years of history is any guide.

Downes is a consultant and author, most recently having written, “The Laws of
Disruption:Harnessing the New
Forces that Govern Business and Life in the Digital Age.”He is a nonresident fellow at the
Stanford Law School Center for Internet & Society.